Page 131 - HBR's 10 Must Reads on Strategic Marketing

ANDERSON, NARUS, AND ROSSUM

industrial gas supplier illustrates this perspective. A customer sent
the company a request for proposal stating that the two or three sup-
pliers that could demonstrate the most persuasive value proposi-
tions would be invited to visit the customer to discuss and refine
their proposals. After this meeting, the customer would select a sole
supplier for this business. As this example shows, “Why should our
firm purchase your offering instead of your competitor’s?” is a more
pertinent question than “Why should our firm purchase your offer-
ing?” The first question focuses suppliers on differentiating their of-
ferings from the next best alternative, a process that requires
detailed knowledge of that alternative, whether it be buying a
competitor’s offering or solving the customer’s problem in a differ-
ent way.
Knowing that an element of an offering is a point of difference
relative to the next best alternative does not, however, convey the
value of this difference to target customers. Furthermore, a prod-
uct or service may have several points of difference, complicating
the supplier’s understanding of which ones deliver the greatest
value. Without a detailed understanding of the customer’s
requirements and preferences, and what it is worth to fulfill them,
suppliers may stress points of difference that deliver relatively
little value to the target customer. Each of these can lead to the
pitfall of value presumption: assuming that favorable points of
difference must be valuable for the customer. Our opening
anecdote about the IC supplier that unnecessarily discounted its
price exemplifies this pitfall.

Resonating focus
Although the favorable points of difference value proposition is
preferable to an all benefits proposition for companies crafting a
consumer value proposition, the resonating focus value proposition
should be the gold standard. This approach acknowledges that the
managers who make purchase decisions have major, ever-increasing
levels of responsibility and often are pressed for time. They want to
do business with suppliers that fully grasp critical issues in their
business and deliver a customer value proposition that’s simple yet

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